Shocked that companies and mutual funds would invest OPM (Other People's Money) in high-risk investments, the Shocked Investor was originally on a mission to find out if our money ended up in these dubious instruments. This blog now also discusses other financial topics, such as straddles, options, gold, natural gas, agri/food stocks, and the collapse of the US Dollar.

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Thursday, January 7, 2010

Mindboggling: Bloomberg reports today that AIG was told by the Federal Reserve Bank of New York to withhold details from the public about the bailed-out insurer’s payments to banks. That Fed was then led by Tim Geithner.

AIG paid banks, which including Goldman Sachs and Societe Generale SA, 100% of the CDSs they bought from them. However, the New York Fed crossed out the reference, as per e-mails on record, and then AIG excluded the language when the filing was made public on Dec. 24, 2008.

The e-mails were obtained by Representative Darrel Issa , ranking member of the House Oversight and Government Reform Committee.

At the time the regulator decided that GS and more than a dozen banks would be fully repaid for $62.1B of the swaps.

“It appears that the New York Fed deliberately pressured AIG to restrict and delay the disclosure of important information,” said Issa, a California Republican. Taxpayers “deserve full and complete disclosure under our nation’s securities laws, not the withholding of politically inconvenient information.” President Barack Obama selected Geithner as Treasury secretary, a post he took last year".

AIG’s Dec. 24, 2008, filing was challenged privately by the SEC. It asked AIG to provide a Schedule A, which lists collateral postings for the swaps and names the bank counterparties that purchased them from the company. The Schedule A was only disclosed about five months later in a filing.

The man is called "Teflon". Let's see if he survives yet this. Shall he not, some puts are in order.